IASB work plan update for March 2014

September 16, 2014

IASB publishes amendments to IFRS 10 and IAS 28 (2011) dealing with the sale or contribution of assets between an investor and its joint venture or associate.

This edition outlines the recent amendments to the accounting under IFRS 10 Consolidated Financial Statements and IAS 28(2011) Investments in Associates and Joint Ventures for sales or contributions of assets between an investor and its joint venture or associate.

In a transaction involving an associate or a joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business.

When an entity:

sells or contributes assets that constitute a business to a joint venture or associate; or

loses control of a subsidiary that contains a business but it retains joint control or significant influence;

the gain or loss resulting from that transaction is recognized in full.

Conversely, when an entity:

sells or contributes assets that do not constitute a business to a joint venture or associate; or

loses control of a subsidiary that does not contain a business but it retains joint control or significant influence in a transaction involving an associate or a joint venture;

the gain or loss resulting from that transaction is recognized only to the extent of the unrelated investors’ interests in the joint venture or associate, i.e. the entity’s share of the gain or loss is eliminated.

The amendments to IFRS 10 and IAS 28(2011) apply prospectively for annual periods beginning on or after 1 January 2016, with earlier application permitted.

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